Mercado, a food market and restaurant incubator that wants to spur local food artisans in western New York, raised $71,471 in 11 days during 2014 on Indiegogo. And Republic Restorative Distillery in Washington, D.C., a women-owned distillery and craft cocktail bar, raised $119,643 in one month last year.
Money raised by restaurants on Indiegogo ranges from $30,000 to $500,000 per campaign, said Alisa Cordesius, director of social innovation and design at Indiegogo. She added that the most successful campaigns offer investor perks, such as restaurant cookbooks, digital downloads of recipes or a special note from the chef.
"Restaurants have become harder and harder to finance," said Greg Wank, a practice leader in the food and beverage industry group at Anchin Block & Anchin. "There's so much competition in metropolitan markets. So people usually go to friends, family and then angel investors for money."
But equity crowdfunding is an extension of friends and family investments, he said. Equity crowdfunding will have its challenges, too. Restaurants must decide how they'll structure the investment and what return they'll offer investors. "Paying investors back in restaurant credits is best, since they only cost a fraction of an investment," he said.
The biggest reason restaurants fail, he said, is underestimating the cost to open, from hiring to stocking the kitchen to getting a lease. There must be enough funds to operate for several months. "You need a great operator who understands the nuances," Wank said.
Neiss cautioned investors and restaurant entrepreneurs that equity crowdfunding isn't a cure for failure.
— By Constance Gutske, special to CNBC.com
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